Cost Sharing

Written by The Financial Express | Updated: Feb 27 2013, 06:29am hrs
Vodafone on Monday joined a growing list of companies demanding a share of revenue from Google, Facebook, etc, citing the unfairness of the current set up of the internet. The telecom companies argumentAirtel, Aircel and now Vodafone have raised the issue in India, while several others like France Telecom and Telecom Italia have raised it in Europeis that while they have to incur huge costs by way of investments in spectrum and infrastructure like telecom towers, companies like Google and Facebook enjoy a free ride, all the while bringing out more and more data-intensive services. On the face of it, this makes sense. Google, Facebook and Twitter have continuously added more data-intensive servicesvideos, photos, maps, video-conferencing, etcthat vastly increase the data traffic on telecom companies already-burdened infrastructure. Ostensibly, the websites do this for free, and thats what the telecom companies want to rectify.

But there are two points worth mentioning here. The first is that websites like Google, Facebook and Twitter cannot expand their services without first investing heavily in server spacevideos and photos that are uploaded take up much more space than mere text. They have to upgrade their infrastructure almost as routinely as the telecom companies do; nothing is free. The second point is, without the services offered by Google, Facebook and the like, telecom companies will see a sharp dip in their data traffic (and hence, revenue). A restaurant does not pay a taxi driver who brought it customers; that analogy should work here too.